The first Chief Economic Advisor of the Modi government, Arvind Subramanian, who served from 2014 to 2018, has said, 48 hours before the budget is delivered on February 1, that “on all fronts, the economy is not in great shape”.
He says there is no doubt that the economy is slowing down and this is not a short-term slow down but structural.
Subramanian adds that to tackle the problem the government needs to change its “DNA and instincts” because the government’s handling of the economy is the problem.
Subramanian identified three areas where this change is most required. They are: the national champions policy which the government is pursuing, the weaponisation of the state in all its different aspects and the policy of protectionism. As he put it, “a deeper recalibration of policy is needed…the government needs to go back to the drawing board and accept that what it’s doing hasn’t worked”. In other words, the current model of handling the economy is not working.
Subramanian, who is at present a senior fellow at the Peterson Institute for International Economics in Washington DC, said that unless the government can rethink its handling of the economy it’s not plausible to believe that India can become Viksit Bharat and a developed country by 2047.
Asked if there was a danger India could become old before it becomes rich, Subramanian said the real danger he sees is that India could become old before it becomes a credible middle income country with a per capita income of $5,000. At the moment India’s per capita income is $2,500 – $2,600.
